Commentary: Balancing the Budget

Commentary: Balancing the Budget

Although the “short sessions” of the General Assembly held on the odd-numbered years are about two weeks less in length than the regular session in the even-numbered years because they do not consider a biennium budget, the fact is that the budget is adjusted at every session of the General Assembly. Revenue projections that are made over a couple of years time frame almost always need to be adjusted. Revenues come over or under projections necessitating corresponding changes to the budget. Recession level declines like that in 2008 required severe budget reductions. The economic recovery has been slower than in the past resulting in some tweaking being needed every year. The Commonwealth operates on a balanced budget with funds going into a rainy day fund when economic growth is strong, and the fund being used to smooth out declines from loss of revenue.

The House and Senate approved different versions of a revised budget for the next fiscal year without prolonged debate that has been a part of these deliberations for many years. The Governor presented a revised budget that brought the next year into balance and funded some high priority items upon which there was bipartisan agreement. Differences do remain that a conference committee will iron out over the remaining weeks of the session.

Highlights of the budget that will remain after the conference committee does its work include important new funding for mental health services. Although the needs in mental health have been recognized for a long time, it took advocates many years and the suicide of a senator’s son to finally get agreement on funding critically needed services. An important aspect of the new services will be to get mentally ill persons out of jails where they have found themselves in recent years when they acted out and there was no other place for them to go.

State employees will finally be getting a raise after many years of waiting. The situation has become increasingly desperate with a high turnover rate. Teachers who are employed by local school boards will not be getting a direct appropriation for a raise from the state, but hopefully the modest increase to localities can be used in part to fund teacher pay raises that are likewise long overdue.

Although the action in the short session on the budget will get us through the next fiscal year, there are long-term structural issues that remain — particularly in funding education. While the division between state and local funding had historically been 60 to 40 percent, the actual division in recent years has been closer to 40 percent state and 60 percent local. The result has been that increasing costs have fallen on local property taxpayers. Virginians like to brag about their low per capita state taxes at $2,275, 36th lowest among the states. Something overlooked is the fact that per capita local taxes in Virginia are $1,928 or 15th highest among the states. We are going to balance the budget for the short-run this session, but we need to do a lot more work about more fairly balancing the budget for the long term.